Tuesday was a good day for the kind of growth stocks that Cathie Wood likes to buy. The co-founder and CEO of ARK Invest saw her largest exchange-traded fund (ETF) soar 9% on the first trading day of the holiday-abridged trading week. She also added to some of her beaten-down positions.
ARK Invest added to her stakes in Twilio (TWLO -0.27%), Velo3D (VLD -1.01%), and Coinbase Global (COIN 1.38%), stocks that are down 78%, 89%, and 84%, respectively, from their 52-week highs. Let's see why she added to her positions in all three investments on Tuesday.
The greatest invention of our generation could be the smartphone, and Twilio is working hard behind the scenes to make that tiny computer that fits in the palm of your hand so indispensable. Twilio is the top dog when it comes to in-app communication solutions. The top smartphone applications are interactive, and the company helps keep parties connected in many ways with alerts, missives, and notifications.
Twilio is growing at a healthy clip. Revenue rose 35% on an organic basis in its latest quarter, or 48% on a reported basis (including a top-line-padding acquisition from last year). It's gaining market share, and with smartphone usage trends continuing to heighten, it's fair to say that it has a clear path to double-digit revenue growth for the next few years.
The bottom line has been a challenge as the company invests in growth both organic and acquired. The good news is that it has posted smaller-than-expected losses in each of the past four quarters, and analysts see Twilio turning the corner of profitability by next year.
One of the smaller companies on Wood's scorecard is Velo3D. It has a market cap of $260 million, and if you back out its strong net cash position, you are left with a balance sheet of roughly $100 million. Velo3D also happens to be one of the faster-growing companies in Wood's portfolio.
Velo3D does 3D printing for the heavy machinery market. Its Sapphire platform is a 3D metal printer that helps its growing list of clients in the aerospace, aviation, industrial power, and oil and gas sectors manufacture essential parts in-house for a fraction of the time that it would take to be secured from third parties.
Revenue clocked in at just $27.4 million last year, but Velo3D expects its top line to more than triple to $89 million this year. A big catalyst is the recent rollout of Sapphire XC, a system that makes parts faster and for as much as 75% less than its original high-end printer.
Velo3D keeps growing; two weeks ago, it opened a center in Germany to manage its operations in Europe as well as host meetings and training sessions.
The one stock on this list that's going through some growing pains is Coinbase. The leading trading exchange for cryptocurrencies is taking a hit as trader interest in digital currencies is waning. Net revenue fell sharply in its latest report, down 53% sequentially but also a problematic 27% decline from where it was a year earlier.
The storm clouds aren't going away. A few smaller crypto platforms have failed in recent weeks, with investors unable to withdraw funds from those wobbling businesses. An optimist will argue that this will send more crypto business Coinbase's way, but the confidence crisis is real. If you just saw your portfolio wiped out in crypto, you're not going to get burned again just because Coinbase is in better financial shape. The company will need the market for digital currencies to bottom out before it has a chance of turning around.